Upstate businesses, residents brace for sequester effects

Feb. 28, 2013

Will McCauley, owner of Creative Buildings, speaks with The Greenville News in his Broad Street office. December 11, 2012. / Heidi Heilbrunn

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Frustrated and fearful, Upstate residents, small business owners and industry leaders tell GreenvilleOnline.com that they can’t believe their government missed its own deadline – set in 2011 – for stopping $85 billion in automatic spending cuts, and it has them worried how the sequestration would affect everything from their children’s education to their ability to hire new workers.

Wanda Jackson was edgy Thursday at A.J. Whittenberg Elementary School of Engineering, and it wasn’t the task of trimming laminated folders for students there that had her feeling that way. It was what the federal government is doing – or not doing – on the budget impasse.

“I think they’re being very stubborn,” she said as she worked the scissors. “I think that they’re just so hard-headed that both sides just don’t want to come to agreement. But I’m praying that eventually they will come to an agreement because it’ll be better for all of us.”

Jackson, who has a daughter in the fourth grade at the downtown Greenville school, volunteers every day to lend teachers a hand. She hasn’t written to her congressman yet, but now she plans to.

“It is something that we all need to get involved in because if we think it’s not going to affect us, it will affect all of us eventually,” she said.

Down the street, Bryan Whitaker was pushing his one-year-old son in a swing at Cleveland Park.

A tech support worker whose wife is a teacher, he expressed feelings of cynicism over the whole federal government process.

“It’s a joke in my opinion the way everything’s handled,” he said. They say money’s going to be saved here and here and here, but they can’t even control spending.

“I think the biggest problem is government spending. We’re just little dots on the map.”

With a toddler to support, money “is definitely important to us,” he said. Not so with the federal government, in his view.

Lori Morton, owner of Aerie Engineering in Greenville’s West End, said she just wishes that Washington would make some decisions.

“I think it’s a shame that we’ve come to this point, once again, where we’re pushed against a deadline. I understand deadlines can push people to make decisions, but sometimes it can push us to make bad decisions,” she said.

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Morton said she doesn’t think there will be a direct effect on her company immediately, “but I think overall it’s going to hurt the general public.”

“Making an across-the-board budget cut for every government service, practically, is ridiculous. It’s just not a smart way of running a business,” she said.

“I can’t imagine doing that to my own business, making a 7 percent cut in everything I do. Some things you just can’t cut 7 percent.”

'Truly unproductive'

Walter Davis, co-chief executive of Greenville-based CertusBank, said the impasse in Washington is “truly unproductive.”

“The opportunity for both sides to really get together and do something meaningful and constructive has been out there for a long time,” he said. “I don’t know that this process helps anyone out right now, especially in an economy that’s recovering.”

Davis also said, “Any time there’s a great deal of uncertainty – and all this does is add uncertainty into the mix – it slows business investment. It also hits those consumers who may be employed by the government and keeps them from going out and getting credit or doing whatever they would normally do.”

Charles Tutterow, executive vice president and chief financial officer of Greenville-based JPS Industries, said companies are enveloped by “decision-making hesitancy or paralysis” with the White House and Congress unable to produce a deal on spending cuts.

With the military not making decisions on body armor and other contracts, companies such as JPS are left uncertain about demand, said Tutterow, whose company is a manufacturer of fiberglass and other materials for the aerospace, electronics and medical industries.

“We don’t get a lot of direct information,” he said. “We just see the results of ‘this should have been done three months ago and nothing’s happening. It’s on somebody’s desk.’ They’re not doing anything with it. So our perspective is that there’s just a lot of stuff on hold.”

Asked about possible impact on the company’s payroll, Tutterow said, “We react to the markets and we react to demand. If we were doing more business, people would be working more hours. We’d be buying more stuff. We’d be selling more stuff.”

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He said the company was expecting an increase in demand from additional participation in certain programs.

“If we see all kinds of things change, we’ll react very quickly to the marketplace.”

Michelin North America Chairman and President Pete Selleck cited optimism about the economy in announcing the company’s $200 million expansion of its plant in Starr recently. The investment will create at least 100 jobs, nearly doubling the facility’s work force.

“It is a reflection of the fact that we continue to grow here in North America,” Selleck told GreenvilleOnline.com. “We are optimistic about economic growth in North America over the very long term.”

But Selleck added, “We recognize that really the only thing in the way of great success and a really good economic trajectory for the United States in the next 20 years is the federal government’s ability to come to grips with the federal deficit.”

He also said, “The solutions are known. Our political leaders simply have to have the political courage to do what is right in the national interest and recognize that special interests now need to be set aside and the national interest needs to be prioritized.”

Likewise, Will McCauley III, president of Creative Builders Inc. in Greenville, said the budget impasse is “absolutely serious.”

“I think the economic engine -- what you see in your world in the news every day -- is the trigger of building permits, whether they are housing or commercial,” he said.

“So you want to send the country back in a tailspin? This will help do it. It’s not the adage of one step forward, two back. It’s one step forward, six back.”

McCauley said if could tell President Barack Obama and Congress what was on his mind, it would be this: “Everybody is worn out, rode hard and sick of the pettiness of Washington.

“We’re just sick of it. We’re taxed and fee-ed to death. We’ve got tax and fee fatigue. Everybody does -- from the individual to the corporation.”

Greenville restaurateur Ruben Montalvo said the effects of the sequester would be “massive but slow almost like cancer.”

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“Eventually it will be felt, of course, with less money into the economy and even merchants from the restaurant side will feel it,” he said, “All of us will lose, not only stateside, but nationwide.”

The greatest tragedy he sees that could come would be the loss of education jobs and monetary support to the state’s educational system.

'More education, not less'

“If anything, we need more education, not less. Already the state ranks among the lowest of the 50 and that to me is the worst part of it,” Montalvo said.

He said a business wouldn’t have let something like this come so close to the deadline. And he said the president and Republicans share some blame, though both sides have some validity.

“The remedy could kill the patient. To have the sequester, which is worse than what either of those two parties are proposing, is a lose-lose situation,” Montalvo said.

“As in all dead-end conflicts, the bigger and better party will be the one giving in enough to achieve a resolution.”

School district officials in Greenville and Pickens counties say their schools will be able to survive the sequestration without any furloughs, layoffs or program cuts, but only because they didn’t gamble on Congress reaching an agreement. They planned ahead.

In Greenville County, district administrators continued policies that helped the schools weather the worst of the downturn in state funding during the recession.

“We can cover this reduction by utilizing carryover funds and some small budget reductions in supplies,” Greenville school spokesman Oby Lyles said.

“We anticipated this last spring, and therefore did not allocate certain funds. As a result of our actions, GCS personnel will not be impacted.”

Pickens County used similar tactics.

“Our fund managers budgeted conservatively this year with the possibility of sequestration in mind, so we do not expect a significant impact on programs or services this year,” Eby said.

Congress would do well to remember what they should have learned in kindergarten, said Shelby Privett, a first-grade teacher at Whittenberg.

“I feel like every day we try to teach our students to get along, and I just wish that Congress could maybe do the same to help benefit the nation’s children,” the 2012 Clemson graduate said.